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Sunday, May 21, 2017

What has been will be again, what has been done will be done again; there is nothing new under the sun


During my two years as auditor on the Bougainville Copper Project in the early 70s, the construction company Hornibrook employed a Filipino accountant by the name of Leon Ortega who was in charge of their large payroll.

He came up with the clever idea of reducing the stated tax deductions on each employee's tax certificate by a small amount and adding the lot to his own certificate to give himself a whopper of a tax refund. It must have been quite a whopper because, even though he didn't diddle PNG's Chief Collector of Taxes but 'only' the tax refunds of hundreds of employees, he ended up as Her Majesty's guest at Bomana Prison.

However, his 'salami trick', while similar, pales into insignificance when compared to Australia’s largest alleged payroll tax scam - click here.

Here's how this latest scam is alleged to have worked:

■ Plutus Payroll Australia provided a payroll administration service for a large number of corporate companies.

■ The companies made regular payments to Plutus on the understanding those funds would be used to pay the wages and superannuation of employees and also to pay the ATO their required pay-as-you-go tax.

■ The syndicate allegedly recruited “straw directors” to act as directors of a series of “second tier” or “straw” companies.

■ Plutus allegedly transferred the payroll funds and a percentage of the PAYG tax to the second-tier companies.

■ However not all of the PAYG commitments were paid to the ATO.

■ Instead, police allege remaining funds were transferred to the syndicate members through false invoices and the bank accounts of front companies.

■ The straw companies would keep logs on the differences between what the ATO was paid and what the syndicate took.

■ The scheme allegedly raked in $165 million.


"I brought my son into work today - I hope you don't mind."
"No worries, Deputy Commissioner ..."


The mastermind behind the scheme is the son of a prominent Deputy Commissioner of Taxation - who seems to have had no knowledge of the scheme - as well as his daughter and a raft of other people. Maybe they thought having a father in high places made them bullet-proof. Perhaps they ought to have taken advice from good ol' Leon Ortega.

Ecclesiastes was right: there is nothing new under the sun.